Federal Student Loan Programs 2019

Federal Student Loan Programs

Will you need a loan to attend college? If you need a loan to help cover the cost of a college or career school education, think federal student aid first. Both federal and private student loans are borrowed funds that you must repay with interest, but federal student loans usually offer lower interest rates and have more flexible repayment terms and options than private student loans.

A federal student loan is made through a loan program administered by the federal government.

Federal student loans offer many benefits that don’t typically accompany private loans. These include fixed interest rates, income-based repayment plans, loan cancellation for certain types of employment, deferment (postponement) options, and interest rate reduction based on the repayment method. Also, private loans usually require a credit check, while most federal loans for students do not. For these reasons, students and parents should always exhaust federal student loan options first before considering a private loan.

A private student loan is a non-federal loan made by a private lender, such as a bank or credit union. The terms and conditions of private student loans are set by the lender, not the federal government. If you’re not sure whether you’re being offered a private loan or a federal loan, check with the financial aid office at your school.

You can determine whether you need a loan and how much you need to borrow by adding up the total cost of your education (tuition, fees, room, and board, etc.) and subtracting the monetary amount of scholarships, grants, and savings you have to contribute to those costs. You should borrow only what you need, and consider the earnings potential in your chosen profession to determine how easily you'll be able to repay your debt. You can find salary estimates for a variety of occupations in the U.S. Department of Labor’s Occupational Outlook Handbook at bls.gov/ooh. Your student loan payments should be only a small percentage of your salary after you graduate.

Federal Loan Program

Program Details (subject to change)

Maximum Annual Award (subject to change)

Direct Subsidized Loan

For undergraduate students who have financial need

For loans first disbursed on or after July 1, 2018, and before July 1, 2019, the interest rate is 5.05%

You’re not usually charged interest on the loan during certain periods, such as when you’re in school at least half-time

The U.S. Department of Education (ED) is the lender; payment is owed to ED

Up to $5,500 depending on grade level and dependency status*

For total lifetime limit, go to StudentAid.gov/subunsub

Federal Loan Program

Program Details (subject to change)

Maximum Annual Award (subject to change)

Direct Unsubsidized Loan

For undergraduate, graduate, and professional degree students; financial need is not required
For loans first disbursed on or after July 1, 2018, and before July 1, 2019:
5.04% interest rate for loans made to undergraduate students, and 6.6% interest rate for loans made to graduate and professional degree students
You’re responsible for interest during all periods
ED is the lender; payment is owed to ED

Up to $20,500 (less any subsidized amounts received for the same period) depending on grade level and dependency status

For total lifetime limit, go to StudentAid.gov/subunsub

Federal Loan Program

Program Details (subject to change)

Maximum Annual Award (subject to change)

Direct PLUS Loan

For parents who are borrowing money to pay for their dependent undergraduate child’s education, and for graduate or professional degree students; financial need is not required
For loans first disbursed on or after July 1, 2018, and before July 1, 2019, the interest rate is 7.6%
The borrower must not have adverse credit**
ED is the lender; payment is owed to ED

The maximum amount is the cost of attendance minus any other financial aid student receives

https://studentaid.ed.gov/sa/sites/default/files/federal-loan-programs.pdf

https://studentaid.ed.gov/sa/resources/loan-grant-fact-sheets

https://studentaid.ed.gov/sa/types